SINGAPORE: Palm oil may retrace to 3,498 ringgit per tonne, as it failed to beak resistance at 3,563 ringgit.
The bearish divergence on the hourly RSI confirms an exhaustion of the rally. The contract is more likely to fall towards 3,498 ringgit than to rise towards 3,627 ringgit.
The pattern between May 17 and May 25 within a range of 3,363-3,498 ringgit looks like a double-bottom. After surging above the neckline around 3,498 ringgit, the contract is yet to pull back towards this line.
The pullback may have been triggered by the resistance at 3,563 ringgit. A break above 3,586 ringgit could lead to a gain to 3,627 ringgit.
Palm set for weekly rise as El Nino concerns support
On the daily chart, a retracement analysis on the fall from 4,425 ringgit reveals a resistance at 3,556 ringgit, which works together with 3,563 ringgit (hourly chart) to stop the rise.
Market is highly likely to consolidate around 3,556 ringgit or a drop towards 3,454 ringgit.
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